Archive for April 2013

Few days ago, I attended the General meeting of the non-profit association I am treasurer of. As each year since 3 years now, I presented the financial statements to the attendees, and the budget for this year. These two documents were approved, and employees were happy about the good results of the association even if we are crossing difficult time.

I was happy of course of this, but I remember people did not have always the same reaction. When I joined the board of directors 3 years ago, some people did not see positively a financial consultant joining a non-profit association. There were probably scared about some confusion with profit and non-profit. Such reaction was understandable, as the finance people are often seen as non-flexible people, only focused on profit and performances. Here is probably a confusion that could be done by employees of a non-profit, but by financial people too.

My first challenge was to be accepted by the people of the organization. My ambition to join this project was not to have power or to tell people how they have to do, but only to join an interesting social project as volunteer, and bring some competences in order to contribute to the success of the common project. My first thought was that I had to learn about the different activities of the organization, the interactions between the stakeholders of the different projects, in order to have a global picture of the association, to understand the work of each people and to be aware about the difficulties they were facing. This was a first condition for an efficient and harmonious collaboration. By showing interest to the work of each employee and volunteer, by asking some question to them about the different aspects of they job, I was showing my real and sincere interest in this project, and people began to trust me, as they noticed also that I did not interfere in their job. Each people his own competences.

There was clearly a need to professionalize the financial and administrative processes, in order to manage things on an efficient way, but also to provide credible financial information to the requesting subsiding authorities and potential partners. It was important to deliver a clear message about this need to get a structured financial process and to explain why. The accounting and the production of financial statement are not only legal obligations, but they represent also a financial management tool. This tool allows organization and her management team to have a clear picture of the financial situation on time, but also to have a “business” decision support. We know all that the business environment is not always a quiet story, but the non-profit environment is not quiet at all too, when your sources of financing are non-recurring sources, and that you are facing some regular crisis situations. In such situations, it is important to show that you have things on control, but also that you are able to define alternative strategies and to express what precisely your needs are, when you meet some potential donator or sponsors. People need to understand that financial tool is needed to ensure the sustainability of the project.

Here again, we speak about the confusion done by some people about things that are totally different. Indeed, what I mean here is that financial management does not mean profit. A non-profit organization does not focus on profit, but it is important to keep an eye on the balance between the expenses and the revenues, in order to preserve the owned capital. The goal is not to earn money, but to avoid to loose money. If it is the case, some decisions need to be taken in order to preserve the funds of the organization, but also to ensure the quality and the continuity of the activities and the provided services. It is not financial performance that is the focus in such environment, but the outcomes. If we try to reduce some operating and administrative expenses, it is not to save the integrality of the money, but to invest in more projects, responding to a demand and contributing to the goal of the association. The saved money will not be distributed to some shareholders, but will be reinvested in future project. This is a difficult part of the equation, to be able to have a long term vision with short term financial vision.

A long term vision is necessary, and projects have to be defined to materialize this vision. An appropriate strategy has to be implemented, in order to reach your defined goal. With these criteria, you focus on the sustainability of your project and the outcomes. These two factors contribute to social cohesion and personal satisfaction of people.